Kern River Gas Transmission Company

Second Revised Volume No. 1

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Effective Date: 02/01/2006, Docket: RP06-160-000, Status: Effective

Fifth Revised Sheet No. 18 Fifth Revised Sheet No. 18 : Effective

Superseding: Fourth Revised Sheet No. 18

RATE SCHEDULE KRF-1

KERN RIVER FIRM TRANSPORTATION SERVICES

(Continued)

5. RATES AND CHARGES (Continued)

5.9 Discounted Rates. (Continued)

(b) Downward adjustment to any rate will be for a specified

term. At the expiration of such term, unless otherwise

agreed upon, the rate for transportation service will revert

to the Maximum Daily Reservation/Demand Rate and associated

commodity rate under this Rate Schedule.

5.10 Negotiated Rates. Notwithstanding the foregoing provisions of this

Section 5, Transporter and Shipper may mutually agree to

Negotiated Rates for service hereunder as provided in Section 23

of the General Terms and Conditions. ACA surcharges pursuant to

Section 5.4 and imbalance charges/and or scheduling penalties

pursuant to Section 5.8 of this rate schedule, as well as fuel

reimbursement pursuant to Section 12 of the General Terms and

Conditions will be applied to Shippers paying Negotiated Rates in

the same manner as they are applied to Shippers paying Recourse

Rates.